Luxembourg Stock Exchange targets fund transparency
The LuxSE project aims to improve transparency for Luxembourg funds
The Luxembourg Stock Exchange is cooperating with IT support company Altus to develop a market infrastructure for European investment funds, which constitute a large part of the Luxembourg economy.
The LuxSE is creating a market infrastructure designed to support the cross-border distribution of funds and make it easier for investors to access and understand fund information. The plan is to cover transaction management and reporting in Luxembourg and then other cross-border UCITS funds domiciled in various countries, using LuxSE’s information agency subsidiary Finesti. Phase one is due to go live in the third quarter this year.
Previously, funds have generally been sold directly by different fund managers, with no standardised process involved and no guarantee that information is presented consistently or in line with any objective standard. The LuxSE project aims to solve that problem by creating a centralised and standardised infrastructure, which will be user-owned and user-governed as a market utility. The underlying connectivity will be provided by Swift.
“Industry players recognise the need for infrastructure in the current regulatory context of cost pressure,” said Dominique Valschaerts, member of the executive committee of the LuxSE. “The FMI will propose for the first time in Europe an innovative utility model with costs shared by participants bringing value added services facilitating cross-border distribution and low transaction costs.”
Phase two of the exchange’s project will involve creating a settlement infrastructure as an alternative to the existing bilateral settlement networks. The exchange also plans to introduce netting, for more efficient settlement and use of collateral. Market participants will be able to choose from different settlement types, including delivery versus payment and standard bank settlement. Phase two is due to be implemented in Q1 2014.
